Tag: news

Authored by Pat Buchanan via Buchanan.org,

A week from today, Joe Biden will still be on his inexorable course to become the 46th president of the United States.

Why, then, the hysteria that has suddenly gripped this city?

The triggering event was the announcement by GOP Sen. Josh Hawley of Missouri.

Despite Leader Mitch McConnell’s plea, Hawley said he intended to challenge the electoral vote in at least one state during the Jan. 6 pro forma reading of the electoral vote count by Vice President (and Senate President) Mike Pence.

If Hawley holds firm, his vote will force the joint session to split up, with each house debating for two hours, and then voting on Hawley’s claim.

Hawley is certain to be defeated as the House is controlled by Nancy Pelosi’s Democrats. As for the Senate, GOP members have indicated they will join the 48 Democratic senators in opposing Hawley.

Yet, though his defeat is inevitable, Hawley is acting in accord with law and precedent. In January 2005, Sen. Barbara Boxer, to the cheers of Democratic colleagues, challenged George W. Bush’s electoral vote victory in Ohio.

Why, then, this panic?

Well, after Hawley announced his challenge and was attacked, even by admirers, Ted Cruz and 10 other GOP senators declared that they, too, would challenge the legitimacy of the electoral votes cast for Biden in swing states such as Georgia and Pennsylvania.

In effect, Cruz & Co. would vote to hold up validating Biden’s victory until a newly formed commission could complete a 10-day investigation of complaints that it was fraudulent or rigged.

And, at last count, 140 House Republicans had signed on to support challenges to Biden’s electoral vote majority.

Still, the certain end here is that all of these challenges will be rejected by majorities in both houses of Congress, and the electoral vote count of 306-232 for Joe Biden will stand.

As the challenges are certain to fail and as Biden’s path to the presidency will remain clear by week’s end, is there something else the Hawley-Cruz challenges are all about?

Indeed. They are also about the succession struggle inside the GOP, about who inherits the Trump estate if the president elects not to run again.

The Haley and Cruz challenges are signals to the Trump faithful that they stood by Trump when the faint of heart had abandoned him to do the establishment’s bidding.

As of today, disbelievers in the validity of Biden’s victory are legion.

According to a Reuters-Ipsos poll of Nov. 18, some 28% of all respondents and 59% of all Republicans said they were concerned that the result of the election had been “rigged.”

Mike Pence, another potential candidate in 2024, also supports the challenges to the electoral vote. Over the weekend his chief of staff Marc Short issued this statement:

“The Vice President shares the concerns of millions of Americans about voter fraud and irregularities in the last election (and) welcomes the efforts of members of the House and Senate to use the authority they have under the law to raise objections and bring forward evidence before the Congress and the American people on January 6.”

Arkansas’ Sen. Tom Cotton, also a potential candidate in 2024, is taking a public stand in opposition to Hawley and Cruz. In a news release Sunday, Cotton declared:

“The Founders entrusted our elections chiefly to the states — not Congress… They entrusted the election of our president to the people, acting through the Electoral College — not Congress. And they entrusted the adjudication of election disputes to the courts — not Congress.”

The Senate’s No. 2 Republican, John Thune of South Dakota, has said that any attempt by House conservatives to challenge the Electoral College’s results is “going down like a shot dog.”

An angry Trump tweeted in retort that he hoped to see “the great Governor of South Dakota @KristiNoem run against RINO @SenJohnThune.”

Noem replied that she considered Thune a “good friend” and will be running for reelection as governor in 2022.

Understandably, McConnell wants to avoid having his GOP majority split over a fruitless challenge to the legitimacy of Biden’s election and splintered among factions supporting presidential hopefuls.

Sunday, Chris Christie sided with McConnell and Cotton, saying that challenges to the electoral vote are going “nowhere… because there’s been no evidence of widespread fraud.”

Christie has called on the party to accept the validity of the election of 2020 and work with the new and legitimate president, Joe Biden.

Given the coronavirus changes in election laws, the extended periods for voting, the massive use of mail-in ballots, the widespread belief that the election was “rigged” and that a change in 35,000 votes out of 155 million cast could have altered the outcome — this belief is going to have a long shelf life in American politics.

The “corrupt bargain” of 1824 that robbed Andrew Jackson of the presidency is still remembered in America’s history books.

This one is going to be fought over for as long.

Although the business press treated the “SPAC” investment craze last year with a modest skepticism, these “reverse IPOs” were only the tip of the deal-frenzy iceberg.

Late last year, we noted that JP Morgan had warned its analysts that their Christmas breaks would be unmercifully short due to the sheer volume of deal-flow. Now that the final numbers are in, it appears the final two weeks of 2020 saw a total of 2,496 deals, according to Bloomberg‘s count. That’s the largest tally for a year-end period ever recorded by Bloomberg.

A total of 2,496 transactions were announced globally in the final two weeks of 2020, according to data compiled by Bloomberg. The deals represent some $187BN in total volume. That’s the most for a festive fortnight on record, the data show.

The largest deal during the period was buyout firm Thoma Bravo’s $9.6BN purchase of property software maker RealPage. Additionally, Dyal Capital Partners said it would merge with Owl Rock Capital Partners, forming an asset manager overseeing some $45BN, while Lockheed Martin agreed to buy Aerojet Rocketdyne for $4.4BN to expand its space division.

“The deal activity over the Christmas period is reflective of the build-up that we started to see in third quarter 2020 and reflects pent-up capacity that had been building for some time,” said Selina Sagayam, a corporate partner at law firm Gibson Dunn & Crutcher LLP.

Of course, “blank-check” SPAC deals remains popular. The most notable of those deals during this period involved a familiar name on Wall Street: boutique advisory firm Perella Weinberg Partners agreed to go public by combining with a vehicle sponsored by finance entrepreneur Betsy Cohen.

Over in the UK, Waterland Private Equity reached a deal to buy Priory Group, a chain of celebrity-focused rehabs.

To be sure, the record number might be an empty victory for some, as the biggest banks are expected to cut bonuses across the board this year (although top money makers might still walk away with an outsize share of the bonus pool).

Like stock markets, dealmakers made up for the COVID-19-inspired turbulence from the first half of the year, and then some.

“The double dip factor of the pandemic and Brexit that blighted 2020 have now been alleviated,” said London-based Sagayam. “This certainly bodes well for general market sentiment and M&A in particular as we enter 2021.”

Dealmakers told Bloomberg they expect business to continue to boom in 2021, a view that’s echoed by their colleagues on the S&T side. 

Of course, this all depends on whether the Fed will keep the cheap money flowing, like it has for more than a decade now.

Authored by Matt Margolis via PJMedia.com,

For Joe Biden, plagiarism has kind of been his thing. His first presidential campaign was doomed by allegations of plagiarism. Not one to learn from his mistakes, his platform, his COVID-19 response plan, and his DNC acceptance speech were all allegedly plagiarized.

Suddenly, his selection of Kamala Harris as his running mate makes more sense. Activist Andray Domise pointed out on Twitter that a story she told Elle Magazine last year just before the election seems awfully similar to a story told by Martin Luther King Jr. about a girl in Birmingham, Alabama.

Let’s take a look and see…

From Elle Magazine, October 6, 2020:

Senator Kamala Harris started her life’s work young. She laughs from her gut, the way you would with family, as she remembers being wheeled through an Oakland, California, civil rights march in a stroller with no straps with her parents and her uncle. At some point, she fell from the stroller (few safety regulations existed for children’s equipment back then), and the adults, caught up in the rapture of protest, just kept on marching. By the time they noticed little Kamala was gone and doubled back, she was understandably upset. “My mother tells the story about how I’m fussing,” Harris says, “and she’s like, ‘Baby, what do you want? What do you need?’ And I just looked at her and I said, ‘Fweedom.’”

Now, here’s what Martin Luther King Jr. said in January 1965 in an interview with Playboy magazine.

I never will forget a moment in Birmingham when a white policeman accosted a little Negro girl, seven or eight years old, who was walking in a demonstration with her mother. “What do you want?” the policeman asked her gruffly, and the little girl looked him straight in the eye and answered, “Fee-dom.” She couldn’t even pronounce it, but she knew. It was beautiful! Many times when I have been in sorely trying situations, the memory of that little one has come into my mind, and has buoyed me.

Eerie coincidence? Maybe. Or just maybe her story is fiction inspired by Martin Luther King’s story about the little girl who said “Fee-dom.”

If so, this would not be the first time Kamala Harris has romanticized her backstory with falsehoods. As PJM’s Tyler O’Neil noted back during the Democratic primaries in 2019, Kamala Harris exaggerated her personal history with busing when she attacked Joe Biden (all but accusing him of being a racist) for his past opposition to racially integrating school via mandated busing. “And there was a little girl in California who was part of the second class to integrate her public schools and she was bused to school every day, and that little girl was me,” she said. It was a well-rehearsed line that ultimately didn’t win over her party, as her campaign failed months later, but it was seen as a powerful moment in her campaign. She also recently has been accused of lying about celebrating Kwanzaa when she was growing up when it wasn’t even invented until two years after she was born. There is also photographic evidence that her family celebrated Christmas.

“Happy Kwanzaa everyone! Of course I remember we always celebrated it when I was a little girl.” pic.twitter.com/JUt8j3Mjbw

— Garbage Human (@GarbyJooman3) December 27, 2020

So, while I can’t say for sure whether her story was true or whether it was inspired by Martin Luther King’s story, based on her past willingness to exaggerate her personal story, I’m inclined not to give the benefit of the doubt.

South Korea has summoned the Iranian ambassador to condemn the Monday seizure of a South Korean-flagged chemical tanker and its crew in the Persian Gulf. Seoul is demanding its immediate release and has dispatched a delegation to Iran to negotiate, following the military already sending an anti-piracy unit to the region.

Iran ostensibly offered the reason for the MT Hankuk Chemi’s detention and “inspection” as environmental violations – a concocted reason it has used in past tanker detentions. The 20-member crew is now said to be in Iranian custody.

However, Iran is now denying that it’s holding the mostly South Korean crew as hostages after the IRGC Navy diverted the vessel near the Strait of Hormuz. This despite Iranian state media publishing footage of IRGC commandos preparing to board the vessel.

Footage taken from a Helicopter earlier today of the South Korean tanker seized by #Iran
pic.twitter.com/FIA0xj5bbW

— Intel Air & Sea (@air_intel) January 4, 2021

As we noted earlier, at the same moment the tanker seizure made international headlines Monday, Iran pressed Seoul over the some $7 billion in assets frozen in South Korean banks due to US-led sanctions.

Iranian government spokesman Ali Rabiei appeared to confirm the drastic action was linked to the asset seizure, telling a press conference on Tuesday that, “We’ve become used to such allegations,” while crucially adding:  

“But if there is any hostage-taking, it is Korea’s government that is holding $7 billion, which belongs to us, hostage on baseless grounds.”

Also looming large in the background is that Joe Biden enters the White House in two weeks.

The owner of the MT Hankuk Chemi tells AP that #IRGC forces stormed the tanker and forced the ship to change course and travel to #Iran. MFA is also deflecting as usual this morning, calling #SouthKorea the real hostage taker.https://t.co/AUb5y6fN8Q

— Jason Brodsky (@JasonMBrodsky) January 5, 2021

Much of this aggressive maneuvering, especially the Monday declaration by the Islamic Republic to start enriching uranium up to 20% – which puts the country a huge step closer to nuclear grade levels – appears toward gaining leverage going into renewed talks with the US about restoring the terms of the JCPOA nuclear deal, which Biden has vowed to put back into place. 

Amid winks, nods, and rumors, WTI Crude futures have just surged back above $50 for the first time since February after OPEC+ appears to have agreed on a small crude output hike in February.

As Reza Zandi reports, OPEC+ will increase the current level of production by only 75 thousand bpd instead of 500 thousand bpd.

It appears that the increase will apply to Russia and Kazakhstan.

Additionally, delegates claim that the Saudis plan to make voluntary output cuts in February, which is quite a shocking signal of The Kingdom’s determination to “re-balance” the oil market.

This is about as ‘best case scenario’ as we can imagine for this meeting.

Developing…

Senator Josh Hawley (R-MO) says that a group of ‘Antifa scumbags’ showed up at his house in Washington D.C. while he was in Missouri and ‘screamed threats, vandalized, and tried to pound open our door.’

Tonight while I was in Missouri, Antifa scumbags came to our place in DC and threatened my wife and newborn daughter, who can’t travel. They screamed threats, vandalized, and tried to pound open our door. Let me be clear: My family & I will not be intimidated by leftwing violence

— Josh Hawley (@HawleyMO) January 5, 2021

A video posted to YouTube by activist group ShutdownDC showed several protesters gathered outside Hawley’s house, with at least one using a bullhorn to rant in the street. The group later issued a statement saying they approached Hawley’s front door and placed a copy of the constitution on it – which was not seen on the recording.

2. We visited Senator Hawley’s house for around 30 minutes. We sang songs, chanted and shared our stories. A small group of people delivered a copy of the constitution to his door (with Article II, Section 1 of the Constitution dog eared for easy reference).

— ShutDownDC (@ShutDown_DC) January 5, 2021

Authored by Lance Roberts via RealInvestmentAdvice.com,

Welcome to 2021. As we kick off a new year, we begin with the S&P 500 trading at historical extremes. It is essential to have some perspective to set reasonable expectations for future returns and quantify the “risk” of something going wrong.

As we discussed with our RIAPRO.NET subscribers yesterday, the real risk to the market in 2021 is over-confidence.

“Currently, Wall Street analysts are wildly exuberant on expectations of explosive economic growth, rising interest rates, and inflation. The problem with those expectations is that in an economy that is $85 Trillion in debt, higher rates and inflation are a ‘death knell’ to economic growth.

Yes, while the Fed may come to the rescue with more QE, with markets already trading at 36x times earnings it is becoming increasingly difficult to justify overpaying for earnings. Eventually, corporate earnings are going to have to markedly improve, or prices will revert.”

There is a high long-term correlation between the index and earnings of 88%. As shown, extreme deviations from the long-term correlation have always preceded short- to intermediate-term corrections.

Short-Term It’s A Coin Toss

In the short-term, which equates from a few days to a few weeks, markets are sentiment-driven. As we showed in “2020-A Year Of Speculative Mania,” investor sentiment is just about as “bullish” as it can get.

“The chart below shows the combined average of institutional and individual investor valuation confidence subtracted from future returns confidence. When the reading is positive, the confidence the market will be higher one year from now is more elevated than the confidence in the market’s valuation.  The opposite is the case when the reading is in negative territory.

The key takeaway is that investors think simultaneously, the market is over-valued but likely to keep climbing.” 

“Such is the same phenomenon famously described by former Fed Chair Alan Greenspan in a December 1996 speech on ‘Irrational Exuberance.’”

However, it is that “sentiment,” or more commonly known as the “Fear of Missing Out,” that can continue to drive prices higher in the short-term.

As shown, the S&P index is currently overbought and trading significantly above its 200-dma. However, with the Bollinger Bands narrowing, the market could trade higher over the next month.

Such a move higher would align with our expectations of the current bullish trade to continue into January.

However, with the more extreme deviation from the 225-day moving average, somewhere between February and March, we could see a correction take hold. Such would be akin to what we saw during the first half of the last 3-years.

Intermediate-Term Is Worrisome

For investors, the outlook becomes much more troubling as we look further out.

The market is trading 3-standard deviations above its long-term mean and is incredibly overbought on a weekly basis. At the same time, there is a negative divergence in relative strength (RSI), which is also a cause of concern.

Since weekly charts are slower moving, such does not mean the markets will crash immediately. Long-term charts indicate that price volatility will likely be higher in the months ahead, and investors should monitor their risk accordingly. While momentum-driven markets can remain irrational much longer than logic would predict, eventually, a reversion has always occurred.

The chart below shows the price deviation from the one-year weekly moving average. Given the deviation is above 15%, price corrections have always been nearby. (Such does not mean a market crash. A correction of 10-20% is well within norms.)

Watch: The Risk of Markets Trading at Historic Extremes

Long-Term View Is Bearish

The monthly chart of the S&P 500 is likewise just as problematic. Again, long-term charts predict long-term outcomes and are NOT SUITABLE for trading portfolios short-term. As shown, the deviation from long-term monthly means and negative divergences in relative strength has previously been warning signs for more significant corrections.

We see the same problematic setup when viewing the market’s current deviation from its 2-year monthly moving average. The current deviation has only occurred 5-times since 1960 and has always led to a correction over the next several months. (Some worse than others.)

However, since 1900, using QUARTERLY analysis, the picture is bearish for returns over the next decade. The research below aligns valuation, relative strength, and deviations into one chart.

There is little to suggest investors who are currently extremely “long equity risk” in portfolios now won’t eventually suffer a more severe “mean-reverting event.” 

While valuations and long-term deviations suggest problems for the markets ahead, such can remain the case for quite some time. It is this long lead time that always leads investors to believe “this time is different.” 

Because of the time required for long-term data to revert, monthly and quarterly data is more useful as a guide to managing expectations, allocations, and long-term exposures. In other words, this data is not as valuable as a short-term market-timing tool.

What Could Cause A Correction In 2021? 

Lots of things.

The market is currently priced for perfection betting on explosive economic growth, a falling dollar, interest rates remaining low, consumer spending surging sharply, and inflation remaining muted. The reality is that none of those things will likely turn out to be the case.

The one thing that always trips of the market is the one thing that no one is paying attention to. For me, that risk lies with the US Dollar. As noted previously, everyone expects the dollar to continue to decline, and the falling dollar has been the tailwind for the emerging market, commodity, and equity-risk trade. Whatever causes the dollar to reverse will likely bring the equity market down with it.

That is the risk we are paying attention to right now.

What This Means And Doesn’t Mean

Let me repeat the following just so there is no confusion.

“What this analysis DOES NOT mean is that you should ‘sell everything’ and ‘hide in cash.’”

As always, long-term portfolio management is about managing “risk” by “tweaking” things over time.

If you have a “so so” hand at a poker table, you bet less or fold.

It doesn’t mean you get up and leave the table altogether.

What this analysis does suppest is that we should use rallies to rebalance portfolios. 

1. Trim Winning Positions back to their original portfolio weightings. (ie. Take profits)

2. Sell Those Positions That Aren’t Working. If they don’t rally with the market during a bounce, they will decline more when the market sells off again.

3. Move Trailing Stop Losses Up to new levels.

4. Review Your Portfolio Allocation Relative To Your Risk Tolerance. If you have an aggressive allocation to equities at this point of the market cycle, you may want to try and recall how you felt during 2008. Raise cash levels and increase fixed income accordingly to reduce relative market exposure.

Could I be wrong? Absolutely. But what if the indicators are warning us of something more significant?

What’s worse:

1. Missing out temporarily on the initial stages of a longer-term advance, or;

2. Spending time getting back to even, which is not the same as making money.

Conclusion

For most investors, the recent rally has been a recovery of what was lost last year. In other words, while investors have made no return over the previous eighteen months, they have lost 18-months of their retirement saving time horizon.

Yes, if the market corrects and reduces some of its current overbought condition without violating supports and maintaining the current bullish trend, we will miss some of the initial upside. However, we can quickly realign portfolios to participate from that point with a much higher reward to risk ratio than what currently exists.

However, if I am right, the preservation of capital during an ensuing market decline will provide a permanent portfolio advantage in the future. The real power of compounding is not in “the winning” but in the “not losing.”

As I noted recently in our blog on trading rules: 

“Opportunities are made up far easier than lost capital.” – Todd Harrison

After yesterday’s debacle in Markit’s US Manufacturing PMI (which rose against expectations of a drop thanks to supplier delivery times rising being judged as a ‘positive’ instead of a clear negative due to trade flow disruption on lockdowns), analysts expected ISM’s Manufacturing survey to signal further deterioration occurred in December (unless slow supplier delivery times are also attributed as a positive).

As hard data has declined aggressively, Manufacturing PMI is at its highest since 2014 while ISM’s Manufacturing survey prints at 60.7 – smashing expectations of 56.8 and well above the 57.5 in November…

Source: Bloomberg

And this is why – Supplier Delivery Times are rising fast…

…and as far as the models are concerned that must be an indication of huge demand… rather than disruption in the global supply chain

Source: Bloomberg

We await the correction from ISM to “fix” this issue and downwardly revise ISM once again.